BOI deadline approaching

Taxing Questions by David Zubler

Millions of businesses will be required to file the new Beneficial Ownership Information (BOI) report. The deadline is January 1, 2025, and the penalties for failing to file the report are severe. Civil penalties start at $500 per day and criminal penalties of up to $10,000 and/or two years in prison.

Companies created or registered in 2024 have 90 days to file the return. Any company created or registered after January 1, 2025, has only 30 days to file the return.

The purpose of the BOI report is to prevent fraudulent and illegal activities.

A business generally needs to file the report if it is a corporation, limited liability company, or a foreign company registered to do business in any U.S. state or Tribal jurisdiction by such a filing.

A Beneficial Owner is anyone who directly or indirectly exercises substantial control over or owns or controls at least 25 percent interest in a business.

An individual exercises substantial control over a reporting company if they fall into any of the following categories:

1. The individual is a senior officer;

2. The individual has authority to appoint or remove certain officers or a majority of directors;

3. The individual is an important decision-maker; or

4. The individual has any other form of substantial control.

The Financial Crimes Enforcement Network (FinCEN) has provided additional details about each of the four reporting categories.

There are 23 types of entities that are exempt from filing the BOI report. The exempt entities include:

•Accounting firms

•Banks

•Brokers/securities dealers

•Insurance companies

•Investment companies/advisors

•Venture capital fund advisors

FinCEN’s Small Entity Compliance Guide provides a list of reporting company exemptions and checklists to help determine if they are exempt from filing the BOI report.

FinCEN has created the BOI E-Filing system to electronically file the report.

For more information about the BOI report, you can go to the FinCEN website at fincen.gov/boi.

David Zubler is a tax accountant and Enrolled Agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. David can be reached at (865) 363-3019 or contacted by email at [email protected].